Charts Predict: Dow 40% Rally to Start on Dec. 15

CNBC.com

Tuesday, 2 Dec 2008 | 5:26 AM ETCNBC.com

SHARES

The Dow Industrial Average is poised for an extended bear-market rally that could see the index gain as much as 40 percent, Sandy Jadeja, chief market strategist at ODL Securities, told CNBC. But don't buy until December 15, Jadeja warned.

"There's a very very very strong rally in the making and it's going to last all the way up into next year into the July period," Jadeja said.

"We can see almost a 25 to 40 percent corrective rally coming up," he said.

The rally will start in or around the week of December 15, but there could be further weakness before then, Jadeja said.

The Dow could slump to 6,800 or 6,400 in the next two weeks as the index forms a bottom before its half-year upswing, he said.

(Watch the full interview with Sandy Jadeja above).

Once the Dow has rallied during the first half of the year it could then retest lows in the second half, he said.

Meanwhile the price of New York light sweet crude oil is set for further weakness, according to Jadeja.

"My personal view is that we are going to see oil at $37, possibly even down to $33," he said.

"To get a real thrust up we are going to have to see a 30 percent rally in order to break above the pivot highs, in order to get back above the moving average, in order to get an increase in momentum. It doesn't look like it's going to happen any time soon," he added.